A few days ago, I spoke to the Director General of the WTO, Roberto Azevedo, on Africa and trade. Here's the transcript of that conversation (a version was published in the East African in the May 24-30 edition at www.theeastafrican.co.ke/news/Africa-global-market-approach-will-see-it-become-trade-frontier/-/2558/2325640/-/luahwxz/-/index.html; and a snippet can be found at http://www.youtube.com/watch?v=-iaCrKdx10M).
Looking at the
global trading environment, there is a lot of talk about multilateral and
bilateral arrangements; either in the process of being discussed or at times to
the point of completion. These include the Trans- Pacific Partnership and the EU-ACP
talks. Where does that leave the global trading system, and specifically the
WTO?
It’s funny because some of that discussion has been
framed in a way that puts the two kinds of initiatives – the bilateral and
multilateral; or plurilateral as we call it sometimes – as being in opposition
to each other when in fact they are not. They are complementary to each other.
There are things you can negotiate faster and deeper in a bilateral context in
those agreements that are more limited and have fewer people around the table.
There are other areas where you can only negotiate in the multilateral system,
for example trade facilitation. If you introduce a measure, or if you have a
system to guide operations at a border, this does not only apply to bilateral
trade – it applies to everybody else. So that kind of thing makes sense to be
negotiated multilaterally. Agricultural subsidies are another one. People can
only negotiate ‘disarmament’ on agricultural subsidisation at the multilateral
level, it’s not going to happen bilaterally. So these are different things. And
from the beginning, from 1947 when the multilateral trading system was created
with GATT (the General Agreement on Tariffs and Trade), we had provisions in
the agreement which allowed for these bilateral, regional agreements. So it’s
something that has been going on forever.
Could it supersede
a WTO framework? When you have the biggest trading countries such as the united
states and the large Asian countries discussing among themselves, could they
come to an understanding that it’s easier to work in that fashion than having
to go through the WTO system?
Not really. ‘Supersede’ would be a reach. But it may make
progress where the multilateral system is not going fast enough. but there are
two limitations there. The first one as I said is one of coverage – you just
can’t cover enough issues that can be covered multilaterally, so these limited
agreements have limitations in substance. The other limitation is that the big,
most developing and dynamic areas in the world today are in the developing countries.
The emerging economies including Africa. These are countries that are growing
really fast. They are not part of these agreements. So by negotiating
bilaterally and regionally, you would be leaving out a big source of trade
growth which is in the developing world.
If I was to be
specific to Africa, there is this very urgent push to conclude the EU-ACP
trading framework. The pressure is such that African countries are speaking
directly to European countries in trying to conclude it. Is that going through
the WTO?
It’s very different what you do bilaterally and what you
do multilaterally. These agreements that the European Union has been
negotiating with Africa, they tend to focus on market access, for example. Some
of it is exclusively, or mostly, on the access of goods and services to the
European market, and vice versa. In the multilateral trading system, you have a
much bigger approach. It’s not just about market access – you’re negotiating
about rules, standards and procedures. All of that is much bigger. I think that
at the end of the day, these negotiations that the EU is holding with African
countries will end up in the WTO. This is because in many areas, for example
agriculture, you may negotiate a quota or a tariff. You then begin to negotiate
under this quota or tariff, but if the importing country is imposing sanitary
measures, or standards which are difficult to observe, but which effectively
prohibit entry of the exports into this market, then you have a situation that
is unfair, because you promise with one hand and you take with the other. At
the end of the day, the multilateral trading system helps to ensure that even
those benefits you negotiate bilaterally will be realised by rules that are negotiated
multilaterally.
That’s an
excellent point that leads to my next question. There are market access
questions. There are also non-tariff barriers questions. In East Africa for
instance, there are road transport corridors with their police and customs
checks. Other regions and other parts of the world have different types of
non-tariff barriers. What is the WTO doing to take these down, or at least to
reduce their impact on global trade?
Well, for one, the WTO offers standards, and a basis for
a conversation. So at the multilateral level at the WTO you have rules which
discipline all these things. There are basic rules – not very specific or
detailed – but they give you the ground rules. These by themselves are a very
important benchmark for a bilateral discussion when you see those kind of
problems arising. Another interesting thing that can be achieved multilaterally
is the forum for conversations, because many of these problems are not solvable
by just bilateral conversations. Sometimes you need to take it to the
multilateral level, bring it to a committee, have a discussion with other
members participating. There is a lot of peer pressure in this exercise, which
is very effective when it is done properly. So the WTO is not about litigation
– some people say ‘I am going to take this before the WTO!’ That’s litigation.
You can start with consultations – bilateral consultations under the aegis of
the WTO. Or you can start by bringing an issue to a committee, or one of the
subsidiary bodies of the WTO and expose the situation, and have the other side
respond to your complaints. Others will participate in the conversation and
say: ‘Is that what you’re doing? That’s not really the way it should be. Are
you sure you’re complying with the disciplines and things like that?’ those
kinds of conversations in Geneva also help to put pressure domestically.
When you look at
global trade, it’s not just about the rules, and the structures. Sometimes it
is just a cyclical thing. When you have a downturn, and some parts of the world
growing faster than others, then global trade becomes affected. How do you deal
with these issues?
We had that very recently because of the 2008 crisis.
After that moment, global trade contracted significantly. It was not in the
same proportion as after the 1929/30 crisis, but it did contract significantly.
And subsequently it picked up again, and it’s still recovering. The funny thing
about why the contraction was not so drastic and deep was precisely because the
rules exist. So there are today fewer tools that you can use to restrict trade
and imports because everybody else in the WTO would complain that you’re
violating an obligation and a treaty agreement. That is a very important tool,
because if you do something that violates WTO disciplines; if it is something
significant, and in these situations of crisis these things are significant for
both the importing and the exporting side, the tendency is to have a very
strong reaction which leads to dispute settlement. And at the end of the day,
this can lead to even retaliation – authorised retaliation – by the WTO. So
there is a degree of self-constraint before anybody begins to engage in
protective measures. So the mere existence of the system helps.
Has the world
learnt? I get the comparison between the 1930s and the recent crisis, but is it
that the world has learnt the dangers of autarky, or is it peer pressure.
Because human nature does not change that quickly.
No, but today I don’t think that anybody believes that
closing the market is the solution for any crisis. This is especially because
in many markets, especially the most sophisticated, the industry needs imports
to survive. They need intermediary imports that go into the production chain
and products which are subsequently exported.
So imports and exports are part of the day-to-day lives of business, and
they need both. So it’s not about meeting a crisis with protectionism and that
will do the trick. The other one is monitoring, which is very important. That
is what we do at the WTO. Every six months, we put out a report on the
restrictive measures that were put out by members. Every member will see, under
its name, the list of restrictive measures that it put in place since 2008.
Everybody else in the WTO sees that, and everybody else asks questions – why is
that in place? What are the effects of this? When are you taking that out? This
exercise is very powerful.
Finally, what can
Africa do to increase its share of global trade? It’s always between 1 and 3%.
For a continent of this size and dynamism, how do we do it?
It is not going to be overnight, that’s for sure. But I
have been travelling, particularly after the ministerial conference in Bali, to
many big markets to see what their appetite is for increasing the negotiation –
to move them forward. And often, I get the question: where is the future? The
private sector wants to know where it will put its money, where to make
investments, where do you see opportunities. My unequivocal, very quick answer
is Africa. I have no doubt that Africa is the next frontier for trade. It has
been developing and doing its homework. It has been opening up, and is
blossoming because it is opening up. It
is not following a closed market approach – it is looking at a global approach.
It is looking at the world and asking where Africa fits into the world. And
progress is going to come out of that – I have absolutely no doubt about that.
Each country in Africa is different, and each will have to figure out its way
forward. But whichever way they choose will have to be figuring out how they
fit into the world and into the global patterns of production. Not trying to
produce everything from A to Z, vertically and horizontally – that just doesn’t
work. It’s figuring out where your competitiveness is, and how do you make the
best of it in light of the environment that you have regionally,
internationally; and cyclically economically.
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